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Equity Bancshares, Inc. Results Include Strong Organic Growth While Expanding Kansas Franchise
Source: Nasdaq GlobeNewswire / 26 Jan 2022 18:38:24 America/New_York
WICHITA, Kan., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported net income of $10.5 million and $0.61 earnings per diluted share for the quarter ended December 31, 2021. Equity’s results include a full quarter contribution from American State Bancshares, Inc. as a result of the completion of its acquisition on October 1, 2021, by Equity and an increased average outstanding share count.
“As we review 2021, we reached milestones for Equity Bank for our customers, teams, and shareholders,” said Brad Elliott, Chairman and CEO. “We issued the first common stock dividend in our company’s history and we completed and successfully integrated the largest merger in our bank’s history, welcoming American State Bank & Trust teammates into the Equity Bank family. Our teams followed that up with the addition of three branch locations in St. Joseph, Missouri, adding a new market to our Missouri footprint.”
Equity customers successfully had $51.3 million of Paycheck Protection Program (“PPP”) loans forgiven during the quarter, resulting in the recognition of fee income totaling $1.7 million in the three-month period ended December 31, 2021. At December 31, 2021, the total unrecognized fee income associated with PPP loans was $1.3 million.
“Equity was founded on entrepreneurial spirit, and that teamwork and collaboration exists in every new initiative we take on as a company, and I’m thankful to our customer service and operational teams for their hard work assisting a diverse range of customers,” said Mr. Elliott. “In 2022, we expect to continue to strengthen our customer delivery options including online and mobile banking, while continuing to offer the personal approach our customers expect from their community bank.”
Notable Items:
- Diluted earnings per share of $0.61, adjusted to reflect core operating results, was $0.82 per diluted share. The adjustment to earnings was comprised of the exclusion of merger expenses of $4.6 million.
- The Company authorized a third stock repurchase program in the third quarter of 2021 totaling 1,000,000 shares. During the quarter ended December 31, 2021, the Company repurchased 132,873 shares at a weighted average cost of $32.99 per share, totaling $4.4 million from this plan as well as 719 shares from the previous authorization that expired on October 29, 2021. At the end of the quarter, capacity of 867,127 shares remained under the current repurchase program.
- Non-accrual loans declined $35.6 million to $29.4 million for the quarter ended December 31, 2021, as compared to the quarter ended September 30, 2021, representing 0.93% non-accrual loans to total loans at December 31, 2021, the lowest level reported since 2016.
Equity’s Balance Sheet Highlights:
- During the quarter, total loans increased from $2.69 billion to $3.16 billion, of which $400 million is attributed to American State Bank & Trust (“ASBT”) loans and includes a reduction in PPP assets of $51.0 million. Excluding the impact of ASBT loans and PPP, loan growth linked quarter was $120.7 million or 18.6% annualized.
- During the quarter total deposits increased to $4.42 billion at December 31, 2021 from $3.66 billion at September 30, 2021. Of the $757.2 million increase in the quarter, $646.5 million is attributed to ASBT deposits.
- As excess liquidity continues to impact the operating environment at quarter end, securities and interest-earning cash and cash equivalents comprise 32.5% of average earnings assets, up from 31.4% at the end of the linked quarter and 26.2% at the end of the comparable quarter in the previous year.
Financial Results for the Quarter Ended December 31, 2021
Net income allocable to common stockholders was $10.5 million, or $0.61 per diluted share, for the three months ended December 31, 2021, as compared to $11.8 million, or $0.80 per diluted share, for the three months ended September 30, 2021, a decrease of $1.3 million. This fourth quarter decrease was attributable to an increase in non-interest expense of $7.4 million and a decrease in net interest income of $1.8 million, partially offset by a decrease in provision for credit losses of $3.2 million, an increase of $1.4 million in non-interest income and a decrease in provision for income taxes of $3.2 million.
Net Interest Income
Net interest income was $37.2 million for the three months ended December 31, 2021, as compared to $39.0 million for the three months ended September 30, 2021, a decrease of $1.8 million, or 4.6%. The decrease in net interest income was primarily driven by a decrease in loan fees, due to the forgiveness of PPP assets, of $6.3 million for the quarter ended December 31, 2021, compared to the quarter ended September 30, 2021. The yield on interest-earning assets decreased 77-basis points to 3.43% during the quarter ended December 31, 2021, as compared to 4.20% for the quarter ended September 30, 2021. The cost of interest-bearing deposits declined by 3 basis points to 0.25% for the three months ended December 31, 2021, from 0.28% in the previous quarter.
Provision for Credit Losses
During the three months ended December 31, 2021, there was a net release of $2.1 million in the allowance for credit losses recognized through the provision for credit losses as compared to a provision of $1.1 million in the allowance for credit losses for the three months ended September 30, 2021. The comparative decrease was primarily driven by a decrease in reserves on specifically assessed assets which was partially offset by improving trends in the Company’s loss experience and moderating economic impacts. For the three months ended December 31, 2021, we had net charge-offs of $7.9 million as compared to $129 thousand for the three months ended September 30, 2021.
Non-Interest Income
Total non-interest income was $9.2 million for the three months ended December 31, 2021, as compared to $7.8 million for the three months ended September 30, 2021, or an increase of 17.5% quarter over quarter. Other non-interest income was $2.3 million, an increase of $1.8 million from the quarter ended September 30, 2021. The increase in other non-interest income was primarily due to the accounting for potential repurchase obligations associated with assets previously purchased through a FDIC assisted transaction. In the third quarter, the Company had identified deterioration of two assets, requiring a reserve and resulting in reduction of income recognition of $771 thousand. Further, the company had an increase of $511 thousand of income related to derivative transactions in quarter ending December 31, 2021.
Non-Interest Expense
Total non-interest expense for the quarter ended December 31, 2021, was $38.1 million as compared to $30.7 million for the quarter ended September 30, 2021. The $7.4 million change is primarily attributed to increases of $2.7 million in other expenses, $1.5 million in salaries and employee benefits driven by the increased headcount related to the American State Bank & Trust merger, and $959 thousand in other real estate owned expense. Included in other expenses is the recognition of $1.4 million of partnership expense related to tax credit activity the Company engaged in with assets being placed into service in the quarter ending December 31, 2021, and also resulted in credits recognized in reduced tax expense.
Asset Quality
As of December 31, 2021, Equity’s allowance for credit losses to total loans was 1.5%, as compared to 2.0% at September 30, 2021. Nonperforming assets were $66.0 million as of December 31, 2021, or 1.3% of total assets, compared to $74.3 million at September 30, 2021, or 1.7% of total assets. Non-accrual loans were $29.4 million at December 31, 2021, as compared to $65.0 million at September 30, 2021. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $138.5 million, or 25.4% of regulatory capital, up from $112.4 million, or 24.3% of regulatory capital as of September 30, 2021. This increase is from classified loans acquired in the ASBT merger, most of which are performing.
During the quarter, non-performing assets decreased by $8.2 million due to the payoff of a relationship that was previously disclosed in 2019 and contributed to a reversal of allowance for credit losses of $2.7 million. A separate large credit previously discussed in prior quarters was moved to other repossessed assets and subsequently sold in mid-January. This relationship totaled $18.7 million and led to a reduction of $1.3 million in previously recorded specific reserves. The Company had a net release of $2.1 million to the allowance for credit losses, comprised of a decrease in specific reserves, primarily driven by resolution of previously identified non-performing assets and continued improved historical loss performance, partially offset by the continued uncertainty of economic conditions driven by the COVID-19 pandemic.
Regulatory Capital
The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, the total capital to risk-weighted assets was 15.9% and the total leverage ratio was 9.0% at December 31, 2021. At December 31, 2020, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.8%, the total capital to risk-weighted assets ratio was 17.4% and the total leverage ratio was 9.3%.
The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.1%, a ratio of total capital to risk-weighted assets of 15.3% and a total leverage ratio of 10.1% at December 31, 2021. At December 31, 2020, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.1%.
Non-GAAP Financial Measures
In addition to evaluating the Company’s results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial condition and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.
The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Company’s expense structure relative to its total revenue. In other words, for every dollar of total revenue recognized, how much of that dollar is expended. To improve the comparability of the ratio to our peers, non-core items are excluded. To improve transparency and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.
Return on average assets before income tax provision, provision for loan losses and goodwill impairment is a measure that the Company uses to understand fundamental operating performance before these expenses. Used as a ratio relative to average assets, we believe it demonstrates the “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity, it can function as an alternative measure of the Company’s earnings performance in relationship to its equity.
Tangible common equity and related measures are non-GAAP financial measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These financial measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.
The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 8 in the following press release tables.
Conference Call and Webcast
Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss the 2021 fourth quarter results on Thursday, January 27, 2022, at 10:00 a.m. eastern time, 9:00 a.m. central time.
Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Thursday, January 27, 2021, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 8086496.
Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.
A replay of the call and webcast will be available two hours following the close of the call until February 3, 2022, accessible at (855) 859-2056 with conference ID no. 8086496 at investor.equitybank.com.
About Equity Bancshares, Inc.
Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NASDAQ Global Select Market under the symbol “EQBK.” Learn more at www.equitybank.com.
Special Note Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.
For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2021, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, such as COVID-19, and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.
Investor Contact:
Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
cnavratil@equitybank.comMedia Contact:
John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(913) 583-8004
jhanley@equitybank.comUnaudited Financial Tables
- Table 1. Consolidated Statements of Income
- Table 2. Quarterly Consolidated Statements of Income
- Table 3. Consolidated Balance Sheets
- Table 4. Selected Financial Highlights
- Table 5. Year-To-Date Net Interest Income Analysis
- Table 6. Quarter-To-Date Net Interest Income Analysis
- Table 7. Quarter-Over-Quarter Net Interest Income Analysis
- Table 8. Non-GAAP Financial Measures
TABLE 1. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)Three months ended
December 31,Year ended
December 31,2021 2020 2021 2020 Interest and dividend income Loans, including fees $ 34,942 $ 35,383 $ 137,334 $ 134,664 Securities, taxable 4,754 3,408 15,996 15,521 Securities, nontaxable 747 913 2,843 3,682 Federal funds sold and other 349 285 1,195 1,694 Total interest and dividend income 40,792 39,989 157,368 155,561 Interest expense Deposits 1,939 2,755 8,255 16,582 Federal funds purchased and retail repurchase agreements 32 25 104 105 Federal Home Loan Bank advances 14 94 169 2,292 Federal Reserve Bank discount window — — — 6 Bank stock loan — — — 415 Subordinated debt 1,592 1,556 6,261 3,509 Total interest expense 3,577 4,430 14,789 22,909 Net interest income 37,215 35,559 142,579 132,652 Provision (reversal) for credit losses (2,125 ) 1,000 (8,480 ) 24,255 Net interest income after provision (reversal) for credit losses 39,340 34,559 151,059 108,397 Non-interest income Service charges and fees 2,471 1,759 8,596 6,856 Debit card income 2,633 2,401 10,236 9,136 Mortgage banking 722 855 3,306 3,153 Increase in value of bank-owned life insurance 1,060 489 3,506 1,941 Net gain on acquisition — 2,145 585 2,145 Net gains (losses) from securities transactions 8 (1 ) 406 11 Other 2,305 852 6,207 2,781 Total non-interest income 9,199 8,500 32,842 26,023 Non-interest expense Salaries and employee benefits 15,119 14,053 54,198 54,129 Net occupancy and equipment 2,967 2,206 10,137 8,784 Data processing 3,867 2,748 13,261 10,991 Professional fees 1,565 1,095 4,713 4,282 Advertising and business development 1,129 801 3,370 2,498 Telecommunications 435 510 1,966 1,873 FDIC insurance 360 797 1,665 2,088 Courier and postage 389 338 1,429 1,441 Free nationwide ATM cost 515 423 2,019 1,609 Amortization of core deposit intangibles 1,080 1,044 4,174 3,850 Loan expense 308 161 934 789 Other real estate owned 617 1,600 (188 ) 2,310 Loss on debt extinguishment — — 372 — Merger expenses 4,562 299 9,189 299 Goodwill impairment — — — 104,831 Other 5,176 2,385 12,226 9,216 Total non-interest expense 38,089 28,460 119,465 208,990 Income (loss) before income tax 10,450 14,599 64,436 (74,570 ) Provision for income taxes (16 ) 2,111 11,956 400 Net income (loss) and net income (loss) allocable to common stockholders $ 10,466 $ 12,488 $ 52,480 $ (74,970 ) Basic earnings (loss) per share $ 0.62 $ 0.85 $ 3.49 $ (4.97 ) Diluted earnings (loss) per share $ 0.61 $ 0.84 $ 3.43 $ (4.97 ) Weighted average common shares 16,865,167 14,760,810 15,019,221 15,098,512 Weighted average diluted common shares 14,669,312 14,934,058 15,306,431 15,098,512 TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)As of and for the three months ended December 31,
2021September 30,
2021June 30,
2021March 31,
2021December 31,
2020Interest and dividend income Loans, including fees $ 34,942 $ 37,581 $ 33,810 $ 31,001 $ 35,383 Securities, taxable 4,754 3,920 3,523 3,799 3,408 Securities, nontaxable 747 655 717 724 913 Federal funds sold and other 349 290 268 288 285 Total interest and dividend income 40,792 42,446 38,318 35,812 39,989 Interest expense Deposits 1,939 1,881 2,025 2,410 2,755 Federal funds purchased and retail repurchase agreements 32 24 26 22 25 Federal Home Loan Bank advances 14 10 80 65 94 Subordinated debt 1,592 1,556 1,557 1,556 1,556 Total interest expense 3,577 3,471 3,688 4,053 4,430 Net interest income 37,215 38,975 34,630 31,759 35,559 Provision (reversal) for credit losses (2,125 ) 1,058 (1,657 ) (5,756 ) 1,000 Net interest income after provision (reversal) for credit losses 39,340 37,917 36,287 37,515 34,559 Non-interest income Service charges and fees 2,471 2,360 2,169 1,596 1,759 Debit card income 2,633 2,574 2,679 2,350 2,401 Mortgage banking 722 801 848 935 855 Increase in value of bank-owned life insurance 1,060 1,169 676 601 489 Net gain on acquisition — — 663 (78 ) 2,145 Net gains (losses) from securities transactions 8 381 — 17 (1 ) Other 2,305 546 2,065 1,291 852 Total non-interest income 9,199 7,831 9,100 6,712 8,500 Non-interest expense Salaries and employee benefits 15,119 13,588 12,769 12,722 14,053 Net occupancy and equipment 2,967 2,475 2,327 2,368 2,206 Data processing 3,867 3,257 3,474 2,663 2,748 Professional fees 1,565 1,076 999 1,073 1,095 Advertising and business development 1,129 760 799 682 801 Telecommunications 435 439 512 580 510 FDIC insurance 360 465 425 415 797 Courier and postage 389 344 327 369 338 Free nationwide ATM cost 515 519 513 472 423 Amortization of core deposit intangibles 1,080 1,030 1,030 1,034 1,044 Loan expense 308 207 181 238 161 Other real estate owned 617 (342 ) (468 ) 5 1,600 Loss on debt extinguishment — 372 — — — Merger expenses 4,562 4,015 460 152 299 Other 5,176 2,484 2,458 2,108 2,385 Total non-interest expense 38,089 30,689 25,806 24,881 28,460 Income (loss) before income tax 10,450 15,059 19,581 19,346 14,599 Provision for income taxes (benefit) (16 ) 3,286 4,415 4,271 2,111 Net income (loss) and net income (loss) allocable to common stockholders $ 10,466 $ 11,773 $ 15,166 $ 15,075 $ 12,488 Basic earnings (loss) per share $ 0.62 $ 0.82 $ 1.06 $ 1.04 $ 0.85 Diluted earnings (loss) per share $ 0.61 $ 0.80 $ 1.03 $ 1.02 $ 0.84 Weighted average common shares 16,865,167 14,384,302 14,356,958 14,464,291 14,760,810 Weighted average diluted common shares 17,141,174 14,669,312 14,674,838 14,734,083 14,934,058 TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)December 31,
2021September 30,
2021June 30,
2021March 31,
2021December 31,
2020ASSETS Cash and due from banks $ 259,131 $ 141,645 $ 138,869 $ 136,190 $ 280,150 Federal funds sold 823 673 452 498 548 Cash and cash equivalents 259,954 142,318 139,321 136,688 280,698 Interest-bearing time deposits in other banks — — — 249 249 Available-for-sale securities 1,327,442 1,157,423 1,041,613 998,100 871,827 Loans held for sale 4,214 4,108 6,183 8,609 12,394 Loans, net of allowance for credit losses(1) 3,107,262 2,633,148 2,763,227 2,740,215 2,557,987 Other real estate owned, net 9,523 10,267 10,861 10,559 11,733 Premises and equipment, net 104,038 90,727 90,876 90,322 89,412 Bank-owned life insurance 120,787 103,431 103,321 102,645 77,044 Federal Reserve Bank and Federal Home Loan Bank stock 17,510 14,540 18,454 15,174 16,415 Interest receivable 18,048 15,519 15,064 16,655 15,831 Goodwill 56,609 31,601 31,601 31,601 31,601 Core deposit intangibles, net 14,879 12,963 13,993 15,023 16,057 Other 99,509 47,223 33,702 30,344 32,108 Total assets $ 5,139,775 $ 4,263,268 $ 4,268,216 $ 4,196,184 $ 4,013,356 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Demand $ 1,244,117 $ 984,436 $ 992,565 $ 972,364 $ 791,639 Total non-interest-bearing deposits 1,244,117 984,436 992,565 972,364 791,639 Savings, NOW and money market 2,522,289 2,092,849 2,035,496 2,074,261 2,029,097 Time 653,598 585,492 659,494 587,905 626,854 Total interest-bearing deposits 3,175,887 2,678,341 2,694,990 2,662,166 2,655,951 Total deposits 4,420,004 3,662,777 3,687,555 3,634,530 3,447,590 Federal funds purchased and retail repurchase agreements 56,006 39,137 47,184 40,339 36,029 Federal Home Loan Bank advances — — 9,208 9,926 10,144 Subordinated debt 95,885 88,030 87,908 87,788 87,684 Contractual obligations 17,692 18,771 4,469 4,856 5,189 Interest payable and other liabilities 49,557 36,804 18,897 20,930 19,071 Total liabilities 4,639,144 3,845,519 3,855,221 3,798,369 3,605,707 Commitments and contingent liabilities Stockholders’ equity Common stock 203 178 176 175 174 Additional paid-in capital 478,862 392,321 389,394 387,939 386,820 Retained earnings 88,324 79,226 68,625 53,459 50,787 Accumulated other comprehensive income, net of tax 1,776 9,475 13,450 12,019 19,781 Employee stock loans — — — — (43 ) Treasury stock (68,534 ) (63,451 ) (58,650 ) (55,777 ) (49,870 ) Total stockholders’ equity 500,631 417,749 412,995 397,815 407,649 Total liabilities and stockholders’ equity $ 5,139,775 $ 4,263,268 $ 4,268,216 $ 4,196,184 $ 4,013,356 (1) Allowance for credit losses $ 48,365 $ 52,763 $ 51,834 $ 55,525 $ 33,709 TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Loans Held For Investment by Type Commercial real estate $ 1,486,148 $ 1,308,707 $ 1,261,214 $ 1,218,537 $ 1,188,696 Commercial and industrial 567,497 569,513 732,126 820,736 734,495 Residential real estate 638,087 490,633 503,110 438,503 381,958 Agricultural real estate 198,330 138,793 129,020 134,944 133,693 Agricultural 166,976 93,767 97,912 93,764 94,322 Consumer 98,590 84,498 91,679 89,256 58,532 Total loans held-for-investment 3,155,628 2,685,911 2,815,061 2,795,740 2,591,696 Allowance for credit losses (48,365 ) (52,763 ) (51,834 ) (55,525 ) (33,709 ) Net loans held for investment $ 3,107,263 $ 2,633,148 $ 2,763,227 $ 2,740,215 $ 2,557,987 Asset Quality Ratios Allowance for credit losses on loans to total loans 1.53 % 1.96 % 1.84 % 1.99 % 1.30 % Past due or nonaccrual loans to total loans 1.18 % 2.78 % 2.09 % 2.30 % 1.99 % Nonperforming assets to total assets 1.28 % 1.74 % 1.56 % 1.67 % 1.36 % Nonperforming assets to total loans plus other
real estate owned2.09 % 2.76 % 2.36 % 2.50 % 2.10 % Classified assets to bank total regulatory capital 25.35 % 24.25 % 23.20 % 26.45 % 25.50 % Selected Average Balance Sheet Data (QTD Average) Investment securities $ 1,330,267 $ 1,061,178 $ 986,986 $ 947,453 $ 814,114 Total gross loans receivable 3,181,281 2,748,202 2,853,145 2,736,918 2,692,223 Interest-earning assets 4,713,819 4,005,509 3,964,633 3,891,140 3,647,730 Total assets 5,068,301 4,275,298 4,231,439 4,143,752 3,910,628 Interest-bearing deposits 3,101,657 2,702,040 2,656,052 2,690,159 2,551,219 Borrowings 165,941 132,581 171,658 139,360 172,730 Total interest-bearing liabilities 3,267,598 2,834,621 2,827,710 2,829,519 2,723,949 Total deposits 4,342,732 3,686,169 3,624,950 3,577,625 2,960,791 Total liabilities 4,507,113 3,852,419 3,827,400 3,748,114 3,501,056 Total stockholders' equity 563,023 422,879 404,039 395,638 409,572 Tangible common equity* 501,814 376,544 356,705 347,262 355,025 Performance ratios Return on average assets (ROAA) annualized 0.82 % 1.09 % 1.44 % 1.48 % 1.27 % Return on average assets before income tax,
provision for loan losses and goodwill
impairment*0.65 % 1.50 % 1.70 % 1.33 % 1.59 % Return on average equity (ROAE) annualized 7.37 % 11.05 % 15.06 % 15.45 % 12.13 % Return on average equity before income tax,
provision for loan losses and goodwill
impairment*5.87 % 15.12 % 17.79 % 13.93 % 15.15 % Return on average tangible common equity
(ROATCE) annualized*8.97 % 13.27 % 17.98 % 18.57 % 14.93 % Return on average tangible common equity
adjusted for goodwill impairment*8.97 % 13.27 % 17.98 % 18.57 % 14.93 % Yield on loans annualized 4.36 % 5.43 % 4.75 % 4.59 % 5.23 % Cost of interest-bearing deposits annualized 0.25 % 0.28 % 0.31 % 0.36 % 0.43 % Cost of total deposits annualized 0.18 % 0.20 % 0.22 % 0.27 % 0.37 % Net interest margin annualized 3.13 % 3.86 % 3.50 % 3.31 % 3.88 % Efficiency ratio* 72.25 % 56.65 % 58.85 % 64.18 % 67.19 % Non-interest income / average assets 0.72 % 0.73 % 0.86 % 0.66 % 0.86 % Non-interest expense / average assets 2.98 % 2.85 % 2.45 % 2.44 % 2.90 % Capital Ratios Tier 1 Leverage Ratio 9.05 % 9.02 % 8.88 % 8.73 % 9.30 % Common Equity Tier 1 Capital Ratio 12.00 % 12.39 % 12.41 % 12.53 % 12.82 % Tier 1 Risk Based Capital Ratio 12.65 % 12.90 % 12.93 % 13.08 % 13.37 % Total Risk Based Capital Ratio 15.94 % 16.63 % 16.74 % 17.02 % 17.35 % Total stockholders' equity to total assets 9.74 % 9.80 % 9.68 % 9.48 % 10.16 % Tangible common equity to tangible assets* 8.44 % 8.82 % 8.68 % 8.44 % 9.05 % Book value per common share $ 29.84 $ 29.08 $ 28.76 $ 27.66 $ 28.04 Tangible book value per common share* $ 25.49 $ 25.90 $ 25.51 $ 24.34 $ 24.68 Tangible book value per diluted common share* $ 25.09 $ 25.42 $ 24.98 $ 23.87 $ 24.32 * The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 8. Non-GAAP Financial Measures
TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)For the year ended For the year ended December 31, 2021 December 31, 2020 Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Interest-earning assets Loans (1) Commercial and industrial $ 714,561 $ 41,580 5.82 % $ 763,971 $ 35,601 4.66 % Commercial real estate 1,040,443 48,676 4.68 % 952,083 50,667 5.32 % Real estate construction 277,307 10,256 3.70 % 238,015 10,947 4.60 % Residential real estate 498,164 19,341 3.88 % 449,789 19,894 4.42 % Agricultural real estate 153,607 8,122 5.29 % 133,813 8,008 5.98 % Agricultural 108,276 5,361 4.95 % 88,206 4,944 5.61 % Consumer 88,383 3,998 4.52 % 70,064 4,603 6.57 % Total loans 2,880,741 137,334 4.77 % 2,695,941 134,664 5.00 % Securities Taxable securities 976,942 15,996 1.64 % 727,452 15,521 2.13 % Nontaxable securities 105,522 2,843 2.69 % 122,783 3,682 3.00 % Total securities 1,082,464 18,839 1.74 % 850,235 19,203 2.26 % Federal funds sold and other 182,443 1,195 0.65 % 112,053 1,694 1.51 % Total interest-earning assets $ 4,145,648 157,368 3.80 % $ 3,658,229 155,561 4.25 % Interest-bearing liabilities Savings, NOW and money market deposits $ 2,162,807 3,705 0.17 % $ 1,795,108 5,893 0.33 % Time deposits 625,562 4,550 0.73 % 704,921 10,689 1.52 % Total interest-bearing deposits 2,788,369 8,255 0.30 % 2,500,029 16,582 0.66 % FHLB advances 16,797 169 1.01 % 213,155 2,292 1.08 % Other borrowings 135,607 6,365 4.69 % 109,064 4,035 3.70 % Total interest-bearing liabilities $ 2,940,773 14,789 0.50 % $ 2,822,248 22,909 0.81 % Net interest income $ 142,579 $ 132,652 Interest rate spread 3.30 % 3.44 % Net interest margin (2) 3.44 % 3.63 % (1) Average loan balances include nonaccrual loans. (2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. (3) Tax exempt income is not included in the above table on a tax-equivalent basis. (4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)For the three months ended For the three months ended December 31, 2021 December 31, 2020 Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Interest-earning assets Loans (1) Commercial and industrial $ 601,103 $ 6,971 4.60 % $ 782,433 $ 10,943 5.56 % Commercial real estate 1,187,747 13,732 4.59 % 980,686 12,647 5.13 % Real estate construction 315,774 3,062 3.85 % 216,714 2,301 4.22 % Residential real estate 618,057 5,174 3.32 % 406,450 5,005 4.90 % Agricultural real estate 206,462 2,919 5.61 % 135,337 2,244 6.60 % Agricultural 151,589 1,929 5.05 % 92,173 1,163 5.02 % Consumer 100,547 1,155 4.56 % 78,430 1,080 5.48 % Total loans 3,181,279 34,942 4.36 % 2,692,223 35,383 5.23 % Securities Taxable securities 1,209,826 4,754 1.56 % 698,985 3,408 1.94 % Nontaxable securities 120,441 747 2.46 % 115,129 913 3.15 % Total securities 1,330,267 5,501 1.64 % 814,114 4,321 2.11 % Federal funds sold and other 202,271 348 0.68 % 141,393 285 0.80 % Total interest-earning assets $ 4,713,817 40,791 3.43 % $ 3,647,730 39,989 4.36 % Interest-bearing liabilities Savings, NOW and money market deposits $ 2,418,492 978 0.16 % $ 1,915,280 970 0.20 % Time deposits 683,165 962 0.56 % 635,939 1,785 1.12 % Total interest-bearing deposits 3,101,657 1,940 0.25 % 2,551,219 2,755 0.43 % FHLB advances 18,197 15 0.32 % 39,245 94 0.95 % Other borrowings 147,744 1,624 4.36 % 133,485 1,581 4.71 % Total interest-bearing liabilities $ 3,267,598 3,579 0.43 % $ 2,723,949 4,430 0.65 % Net interest income $ 37,212 $ 35,559 Interest rate spread 3.00 % 3.71 % Net interest margin (2) 3.13 % 3.88 % (1) Average loan balances include nonaccrual loans. (2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. (3) Tax exempt income is not included in the above table on a tax-equivalent basis. TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)For the three months ended For the three months ended December 31, 2021 September 30, 2021 Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Interest-earning assets Loans (1) Commercial and industrial $ 601,103 $ 6,971 4.60 % $ 630,622 $ 13,646 8.59 % Commercial real estate 1,187,747 13,732 4.59 % 1,009,141 12,072 4.75 % Real estate construction 315,774 3,062 3.85 % 283,106 2,664 3.73 % Residential real estate 618,057 5,174 3.32 % 512,135 5,073 3.93 % Agricultural real estate 206,462 2,919 5.61 % 134,673 1,819 5.36 % Agricultural 151,589 1,929 5.05 % 91,878 1,370 5.92 % Consumer 100,547 1,155 4.56 % 86,647 937 4.29 % Total loans 3,181,279 34,942 4.36 % 2,748,202 37,581 5.43 % Securities Taxable securities 1,209,826 4,754 1.56 % 966,651 3,920 1.61 % Nontaxable securities 120,441 747 2.46 % 94,527 655 2.75 % Total securities 1,330,267 5,501 1.64 % 1,061,178 4,575 1.71 % Federal funds sold and other 202,271 348 0.68 % 196,129 290 0.59 % Total interest-earning assets $ 4,713,817 40,791 3.43 % $ 4,005,509 42,446 4.20 % Interest-bearing liabilities Savings, NOW and money market deposits $ 2,418,492 978 0.16 % $ 2,082,515 862 0.16 % Time deposits 683,165 962 0.56 % 619,525 1,019 0.65 % Total interest-bearing deposits 3,101,657 1,940 0.25 % 2,702,040 1,881 0.28 % FHLB advances 18,197 15 0.32 % 1,401 10 2.78 % Other borrowings 147,744 1,624 4.36 % 131,180 1,580 4.78 % Total interest-bearing liabilities $ 3,267,598 3,579 0.43 % $ 2,834,621 3,471 0.49 % Net interest income $ 37,212 $ 38,975 Interest rate spread 3.00 % 3.71 % Net interest margin (2) 3.13 % 3.86 % (1) Average loan balances include nonaccrual loans. (2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. (3) Tax exempt income is not included in the above table on a tax-equivalent basis. TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Total stockholders' equity $ 500,631 $ 417,749 $ 412,995 $ 397,815 $ 407,649 Less: goodwill 56,609 31,601 31,601 31,601 31,601 Less: core deposit intangibles, net 14,879 12,963 13,993 15,023 16,057 Less: mortgage servicing asset, net 276 — — — — Less: naming rights, net 1,087 1,098 1,109 1,119 1,130 Tangible common equity $ 427,780 $ 372,087 $ 366,292 $ 350,072 $ 358,861 Common shares issued at period end 16,779,029 14,365,785 14,360,172 14,383,913 14,540,556 Diluted common shares outstanding at period end 17,050,115 14,637,306 14,664,603 14,668,287 14,756,378 Book value per common share $ 29.84 $ 29.08 $ 28.76 $ 27.66 $ 28.04 Tangible book value per common share $ 25.49 $ 25.90 $ 25.51 $ 24.34 $ 24.68 Tangible book value per diluted common share $ 25.09 $ 25.42 $ 24.98 $ 23.87 $ 24.32 Total assets $ 5,139,775 $ 4,263,268 $ 4,268,216 $ 4,196,184 $ 4,013,356 Less: goodwill 56,609 31,601 31,601 31,601 31,601 Less: core deposit intangibles, net 14,879 12,963 13,993 15,023 16,057 Less: mortgage servicing asset, net 276 — — — — Less: naming rights, net 1,087 1,098 1,109 1,119 1,130 Tangible assets $ 5,066,924 $ 4,217,606 $ 4,221,513 $ 4,148,441 $ 3,964,568 Total stockholders' equity to total assets 9.74 % 9.80 % 9.68 % 9.48 % 10.16 % Tangible common equity to tangible assets 8.44 % 8.82 % 8.68 % 8.44 % 9.05 % Total average stockholders' equity $ 563,023 $ 422,879 $ 404,039 $ 395,638 $ 409,572 Less: average intangible assets 61,209 46,335 47,334 48,376 54,547 Average tangible common equity $ 501,814 $ 376,544 $ 356,705 $ 347,262 $ 355,025 Net income (loss) allocable to common stockholders $ 10,466 $ 11,773 $ 15,166 $ 15,075 $ 12,488 Amortization of intangible assets 1,116 1,040 1,041 1,045 1,055 Less: tax effect of intangible assets amortization 234 218 219 219 222 Adjusted net income (loss) allocable to common
stockholders$ 11,348 $ 12,595 $ 15,988 $ 15,901 $ 13,321 Return on total average stockholders' equity
(ROAE) annualized7.37 % 11.05 % 15.06 % 15.45 % 12.13 % Return on average tangible common equity
(ROATCE) annualized8.97 % 13.27 % 17.98 % 18.57 % 14.93 % Non-interest expense $ 38,089 $ 30,689 $ 25,806 $ 24,881 $ 28,460 Less: merger expense 4,562 4,015 460 152 299 Non-interest expense, excluding merger expense and loss
on debt extinguishment$ 33,527 $ 26,674 $ 25,346 $ 24,729 $ 28,161 Net interest income $ 37,215 $ 38,975 $ 34,630 $ 31,759 $ 35,559 Non-interest income 9,199 7,831 9,100 6,712 8,500 Less: net gain on acquisition — — 663 (78 ) 2,145 Less: net gains (losses) from securities transactions 8 381 — 17 (1 ) Non-interest income, excluding gains (losses) from
securities transactions$ 9,191 $ 7,450 $ 8,437 $ 6,773 $ 6,356 Net interest income plus non-interest income,
excluding net gain on acquisition and net gains
(losses) from securities transactions$ 46,406 $ 46,425 $ 43,067 $ 38,532 $ 41,915 Non-interest expense to
net interest income plus non-interest income82.06 % 65.57 % 59.01 % 64.67 % 64.60 % Efficiency ratio 72.25 % 57.46 % 58.85 % 64.18 % 67.19 % Net income (loss) allocable to common stockholders $ 10,466 $ 11,773 $ 15,166 $ 15,075 $ 12,488 Add: income tax provision (16 ) 3,286 4,415 4,271 2,111 Add: provision (reversal) of credit losses (2,125 ) 1,058 (1,657 ) (5,756 ) 1,000 Adjusted net income $ 8,325 $ 16,117 $ 17,924 $ 13,590 $ 15,599 Total average assets $ 5,068,301 $ 4,275,298 $ 4,231,439 $ 4,143,752 $ 3,910,628 Total average stockholders' equity $ 563,023 $ 422,879 $ 404,039 $ 395,638 $ 409,572 Return on average assets (ROAA) annualized 0.82 % 1.09 % 1.44 % 1.48 % 1.27 % Adjusted return on average assets 0.65 % 1.50 % 1.70 % 1.33 % 1.59 % Adjusted return on average equity 5.87 % 15.12 % 17.79 % 13.93 % 15.15 %